5 Ways to Invest Outside of Your 401(k)

Investing your money is one of the best things that you can do for your future. If you have any retirement dreams, you aren’t going to get there without investing. Maxing out your 401(k) account is one of the best ways to do that, but it probably isn’t going to be enough. Luckily, there are hundreds of ways that you can invest that don’t involve your 401(k) account.

Robo-Investing

If you want to jumpstart your investing, but you don’t want to spend hours researching each option, then robo-advisors are the best bet. There are dozens and dozens of websites that use these advanced algorithms (called robo-advisors) to invest your money.

One of the best sites is Betterment, which makes investing easier than ever before. All that you have to do is create an account, set your financial goals, and then start making contributions. After that, their robo-advisors are going to handle the rest. They will invest your money and then continue to invest your money as you make earnings and as you get closer to your financial goals.

Gold

Okay, a lot of people see investing in gold as a “doomsday” investors technique, but gold has held its value better than just about any other investment option. There are several different ways that you can invest your money in gold — everything from buying physical gold to buying gold stocks. While some mutual funds include gold funds, they typically don’t appear as a choice in 401(k) plans, so you’ll need to seek this out on your own.

Bonds

If you’re looking for a low-risk investment option that doesn’t involve your 401(k), then bonds are a great place to start. Buying bonds is one of the most straightforward ways to invest your money, and it’s very simple to do, even if you have little investing experience. You might also enjoy a higher yield on bonds you buy outside of any fixed income funds that might be available in your 401(k) plan.

The idea behind bonds is simple. You purchase a bond from a company or government entity, and they hold that money for the length of the bond, and they invest that money, and once the length of the bond has expired, you get your money back plus the money earned at the rate that was disclosed on the bond. Bonds are one of the lowest risk investments that you can make.

Peer-to-Peer Lending

The idea of peer-to-peer lending goes back for thousands of years. As long as people have needed money, there have been people willing to lend money. Thanks to the internet, now it’s extremely simple to connect with people that are seeking a loan.

There are dozens of sites that you can choose from, but the most popular is Lending Club. Lending Club allows you to browse dozens and dozens of investment options. You don’t have to fund the whole loan yourself. Instead, you can purchase notes in a loan, and you can invest as little as $20 into a loan. While it might sound risky, but Lending Club has excellent risk analysis. They have a default rate that is some of the lowest of any of the available risks.

Roth IRA

One of the best ways to invest outside of your 401(k) is to open a Roth IRA. Roth IRA is similar to 401Ks in the way that they operate. You will make contributions into the account (you’re limited to $5,500 a year if you’re under 50), and that money will be invested into a variety of different avenues. With a Roth IRA, all of the taxes are taken out before you contribute, which means that when you withdraw your Roth IRA account contributions, they won’t be taxed.

Investing Without the 401(k)

Investing is one of the best ways that you can secure your financial future. If you’ve never invested outside of your 401k before, then it’s time to get started. Your 401k is one of the best investment vehicles that you can use, but it shouldn’t be the only vehicle that you’re using.

The most important thing about investing is that you start as soon as possible. Most people assume that you have to have thousands and thousands of dollars in your bank account to start an investment portfolio, but that couldn’t be further from the truth. There are several ways that you can start your investing journey with that $20 that has been sitting in your wallet. The sooner that you start investing, the bigger impact that it can have.

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